Miami Village MHP
Fort Wayne, IN | Off-Market Acquisition | June 2024
Overview
Miami Village MHP is an all-ages, affordable community comprising 94 spaces in Fort Wayne, Indiana (the #6 Housing Market in the Country, per Wall Street Journal). This community was acquired at 34% below market value. We purchased Miami Village for $2.75 million, with current valuation of $4.19 million, creating a 40%+ return on equity for our investors, day one.
About the Project
Like the lion’s share of our deals, Miami Village was acquired through a direct-to-owner transaction, facilitated by our extensive local network. With over 700 units already owned in the Fort Wayne MSA, we were able to significantly leverage existing relationships to purchase this deal in full alignment with our immediate equity, implementing value-add improvements, and achieving substantial returns.
The Challenge
At acquisition, Miami Village faces several challenges. The lot rents are 32% below market, and operational inefficiencies need to be addressed. Additionally, the property requires aesthetic and infrastructure improvements to maximize its potential.
What We Plan To Do
In order to drive our investors’ bottom line, create strong streams of cash flow and improve the lives of the residents, we are:
- Increasing Lot Rents: Adjust lot rents towards market rates to increase NOI and investor cash flow
- Operational Efficiency: Address and improve operational inefficiencies through our light value-add process.
- Property Improvements: Enhance property aesthetics and infrastructure to attract and retain residents.
- Leverage Existing Portfolio: Utilize our existing 700-space portfolio in Fort Wayne for economies of scale.
Expected Outcomes
Sunrise Capital Investors anticipates that these strategic improvements will result in:
- Increased NOI: Significant growth in Net Operating Income (NOI) through rental adjustments and operational efficiencies.
- Property Value Increase: A projected increase in property value to $5.48 million, reflecting a $1.45 million gain on the initial investment.
- Equity Multiple: A target equity multiple of 1.99 within two years, reflecting nearly a 100% return on a property acquired with no debt.
Since we purchased this property with a 40% Margin of Safety, we’re off to a fantastic head start with this property.
Summary
Miami Village MHP exemplifies our approach to mobile home park investments: acquiring undervalued assets, enhancing their value through strategic improvements, and realizing substantial returns. This property not only benefits from our established presence in the Fort Wayne MSA but also underscores our commitment to providing safe, affordable housing while delivering outstanding investor returns.
By maintaining a focus on operational excellence and leveraging our extensive market knowledge, Sunrise Capital Investors aims to achieve exceptional results, even without the use of financial engineering. We bought this one with a 40% return on equity, day one – we’re only going up from here. Once we implement the “improve” and “refinance” elements of our strategy, we expect investor cash flow and growth for decades to come.